What is USDC cryptocurrency? The most important thing about the popular stablecoin

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• USD Coin (USDC) is a centralized stablecoin pegged to the dollar. It is the second largest price stable crypto asset by capitalization after Tether (USDT).
• The price of 1 USDC is equal to $1 and has an extremely low deviation from the target level (less than 1%) since the spring of 2020.
• USDC is backed by reserves of debt securities and cash held on the balance sheet of US regulated financial institutions and regularly audited.
• The issuer of the stablecoin is CENTER, a consortium of American companies Circle and Coinbase.

Why is USDC a popular stablecoin?

The USDC token was released in September 2018. The issuer was a consortium CENTERwho founded Coinbase and Circle.

As of summer 2022, USDC is the second largest stablecoin by capitalization after USDT (Tether). During 2021, the market value of the asset, according to CoinGeckogrew more than 10 times, from $4 billion to $42.4 billion and reached almost $55 billion by the end of June 2022.

USDC is a centralized stablecoin and is popular for several reasons. Market participants trust the issuers of the asset: Circle and Coinbase are large and regulated financial institutions that maintain high standards of work and comply with laws.

In addition, they managed to create a transparent reporting system for USDC reserves, which are the basis for the reliability and trust in centralized stablecoins. The funds needed to secure the USDC price are kept on the balance sheets of the largest US banks and are regularly audited by an independent auditor.

According to Arcane Research analysts, by the fall of 2022, USDC will surpass its main competitor – Tether (USDT) – in terms of market capitalization.

Why is USDC needed?

Stablecoins were created to reduce the risks of cryptocurrency market volatility. Therefore, they are a suitable medium for on-chain transactions and capital storage.

These cryptoassets are useful for investors and traders: they use stablecoins for settlements on trading platforms, store in them the profit received from trading digital assets, as well as part of the investment portfolio.

Additional benefits of stablecoins like USDC are being revealed in the realm of decentralized finance. The token is used in various trading protocols such as Aave, Celsius Network, Compound and others.

On which blockchains is USDC available?

USDC was originally launched on the Ethereum blockchain in the form of an ERC-20 token, but has since supported other networks:

How is USDC secured?

The centralized USDC issuer controls the reserves. As of July 2022, they were three-quarters short-term U.S. Treasuries and one-quarter cash dollars. All these funds are held in accounts with leading US financial institutions: BlackRock, BNY Mellon, Bank of New York and others.

USDC reserve information is part of the USDC issuer’s public financial statements. The accounts are audited by US accounting firm Grant Thornton LLP, which publishes attestations of reserves that maintain the USDC peg to the dollar. The audit examines the accuracy, completeness and composition of reserves, as well as information about internal controls that ensure the accuracy of financial reporting.

Monthly reserve reports are being submitted to the U.S. Securities and Exchange Commission (SEC) as Circle intends to go public at the end of 2022.

Following the collapse of Terra, Circle CEO Jeremy Allaire released a series of messages aimed at building confidence in the USDC. In one of them, he promised that in the future, collateral reports would be issued daily.

What is Euro Coin (EUROC)?

At the end of June 2022, Circle introduced a new stablecoin called Euro Coin (EUROC), whose value is pegged to the euro.

The token is issued on the Ethereum network and is available on the BitMart, Bitpanda, CEX.io, FTX and HitBTC platforms. The asset is also traded on decentralized exchanges Curve and Uniswap. According to CoinGecko, as of August 15, the stablecoin capitalization is more than $5.3 million.

EUROC reserves are held in euro-denominated accounts. Fund custodians are Fireblocks, Anchorage Digital and CYBAVO.

Why is the project criticized?

In early August, the US authorities placed the website of the blockchain mixer Tornado Cash, as well as associated cryptocurrency addresses, on the sanctions list.

Following this, Circle blocked the USDC addresses of Tornado Cash wallets, which held over 75,000 tokens.

This decision was criticized in the crypto community, and the co-founder of the MakerDAO DeFi protocol, Rune Christensen, proposed to exchange USDC worth $ 3.5 billion, which serve as security for the decentralized stablecoin DAI, for Ethereum. Vitalik Buterin opposed this idea.

At the beginning of 2022, at least two blockchain projects – Nomad and Slope, in which Circle invested, were hacked. The company ruled out the impact of incidents on USDC reserves.